Finance Minister Jim Flaherty insisted he has a viable plan to return the federal government to surplus, stressing that much of his recession-fighting spending is one-time and won't be renewed.
"That's the way you control spending, by having temporary programs," Mr. Flaherty told reporters after testimony at the House of Commons Finance Committee Tuesday. "We have a plan. Temporary spending will end. We'll use the surplus first of all to pay off the deficits we incur now."
The finance minister is coming under increasing pressure to explain how he will close the $50.2-billion deficit for the fiscal year ending March 31, 2010, that he projected earlier this month. That's $16.5-billion wider than Mr. Flaherty expected when he presented his budget at the end of January.
Official Opposition Leader Michael Ignatieff is demanding clarity on Mr. Flaherty's long-term deficit projections as a condition for his continued support of the minority government. At the same time, investors in global financial markets are getting jittery about how governments intend to pay for all the debt they've taken on trying to spend their way out of the global recession.
Mr. Flaherty pledged in January that he would record a small surplus of $700-million by 2014. Despite the larger-than-expected deficit this year, he maintains that promise still is achievable.
Stimulus measures such as the tax credit for home renovation expires in February, and the billions pledged for infrastructure projects end in two years. The money spent rescuing General Motors Corp. and Chrysler LLC is a one-time budgetary expense.
To eliminate the remaining deficit, Mr. Flaherty's exit plan relies on economic growth.
The finance minister noted that some banks predict that Canada's economy will expand 2.5 per cent next year, which would generate a fresh wave of revenue.
Mr. Flaherty said he believed his stimulus measures are on track to meet the budget pledge of creating roughly 190,000 jobs. He repeated that he would not raise taxes to close the budget shortfall.
"What we have to rely on for the balance is a return to economic growth," Mr. Flaherty said. "That's how government revenues grow and we anticipate a return to economic growth."Report Typo/Error